P20-5B + Link Back to Chapters 2 and 19. Coalton Electric manufacturers specialized parts used in power generation. Initially, the company manufactured the parts for its own use, but it gradually began selling them to public utilities as well. The trial balance of Coalton Electric's manufacturing operation on January 1 is as follows: COALTON ELECTRIC-MANUFACTURING OPERATIONS Trial Balance Cash. Accounts receivable. Inventories: Materials Work in process Finished goods. Plant assets Accumulated depreciation.. Accounts payable Wages payable. January 1, 20XX Common stock Retained earnings. Sales revenues. Cost of goods sold. Manufacturing wages. Manufacturing overhead. Marketing and general expenses. $ 54,000 65.860 14,180 43.350 56,640 342.860 $145,050 83.920 5,700 200,000 142.220 $576.890 $576.890 January 1 balances in the subsidiary ledgers were Materials ledger: petrochemicals, $5,280; electronic parts, $7,800; indirect materials, $1,100. Work in process ledger: Job 86, $43,350. Finished goods ledger: transformers. $35,770; switches, $20,870. January transactions are summarized as follows.

a. Payments on account, $79,330.

b. Marketing and general expenses incurred and paid. $21.660.

c. Collections on account, $187,880.

d. Materials purchased on credit: petrochemicals. $19,570; electronic parts, $28,360; indi- rect materials. $6,130.

e. Materials used in production (requisitioned): Job 86: petrochemicals, $3,800. Job 87: petrochemicals, $9,870; electronic parts, $5,690. Job 88: petrochemicals, $7.680; electronic parts, $29.920. Indirect materials, $6,760.

f. Manufacturing wages incurred during January, $52,080, of which $49,560 was paid. Wages payable at December 31 were paid during January, $5,700. g. Labor time records for the month: Job 86, $4,000; Job 87. $20,880: Job 88. $16.560; indi- rect labor, $10,640. h. Other actual miscellaneous manufacturing overhead costs incurred on account. $27.660. i. Depreciation on manufacturing plant and equipment (not included in item h above), $6,710. j. Manufacturing overhead was allocated at the predetermined rate of 120% of direct labor cost. k. Jobs completed during the month: Job 86, one transformer at total cost of $55.950; Job 87, 400 switches at total cost of $61,496. 1. Credit sales on account: All of Job 86 for $96,490 (cost $55,950); Job 87, 300 switches for $88,030 (cost, $46,122). m. Close Manufacturing Overhead account to Cost of Goods Sold. Required 1. Open T-accounts for the general ledger, the materials ledger, the work in process ledger. and the finished goods ledger. Insert each account balance as given, and use the reference Bal. 2. Record the January transactions directly in the accounts, using the letters as references. Coalton Electric uses a perpetual inventory system. 3. Prepare a trial balance at January 31. 4. Use the work in process T-account to prepare a schedule of cost of goods manufactured for the month of January. 5. Prepare an income statement for the month of January. To calculate cost of goods sold. you may want to review Exhibit 19-11. (Hint: In transaction m you closed any under/overallocated manufacturing overhead to Cost of Goods Sold. In the income state- ment, show this correction as an adjustment to Cost of Goods Sold. If manufacturing overhead is underallocated, the adjustment will increase Cost of Goods Sold. If overhead is overallocated, the adjustment will reduce Cost of Goods Sold.)